In what regulators were quick to portray as an "isolated" incident, Alpharetta, Ga.-based thrift NetBank Inc. was closed by the OTS today. The Federal Deposit Insurance Corp. was named as the receiver for the bank's $2.5 billion in assets.
The Net Bank failure is the largest since 1993, and is the first bank failure tied to trouble in the subprime market. The thrift had high exposure to the subprime mortgage market and could not sell its nonperforming units.
A press statement issued by the OTS noted that "NetBank sustained significant losses in 2006 primarily due to early payment defaults on loans sold, weak underwriting, poor documentation, a lack of proper controls, and failed business strategies."
From American Banker (subscription req'd), officials were adamant in their position that the NetBank closing did not reflect a broader problem among banks:

â€œThis is really an isolated situation,â€? said Kevin Petrasic, an OTS spokesman. â€œWhat was going on at this institution is not something that's going on at any of our other institutions.â€?
NetBank's problems â€œwent beyond subprime,â€? Mr. Petrasic said. The thrift operated smoothly as an Internet bank, but it could not maintain its growth when expanding into a mortgage banking operation, he said. â€œThey just did not get a handle on the loans that they were making,â€? he said.

The FDIC issued a press statement subsequent to the OTS noting that ING would assume the deposits of the failed online bank, and that NetBank customers would automatically become ING customers.
"When a bank fails, it touches almost every office and division in the corporation," said FDIC Chairman Sheila C. Bair.
"As chairman, it makes me proud to see the hard work and dedication demonstrated by staff. Since we began insuring banks in 1934, not a single depositor has lost a penny of insured deposits. Customers of NetBank should have confidence and security knowing that they will have access to their insured funds in a timely and orderly manner."
Many words come to my mind in describing the current market we're in, but I think it's safe to say that "confidence" and "security" are not among them.

This month inHousingWire magazine

Eight years after we began recognizing women for their influential work in the expanding housing and mortgage finance ecosystem, a traditionally male-dominated field, our Women of Influence list is bigger and better than ever! This year, we honor 85 women who are making lasting achievements in each sector of the housing economy. Read on to learn more about these accomplished women and the strides they are making in their industry segments.

Feature

The financial world at large is experimenting with changing its workforce culture in ways not fathomable 10 years ago. For example, in 2011, the dress code for female workers at UBS came to light with unflattering results. In it, the Swiss bank instructed female employees on not just how to dress and how to smell, but also preached the importance for ladies to apply lotion after taking showers. Fast forward to today and fellow Swiss bank, Credit Suisse has now created an official role to boost equal opportunities and create a fair treatment environment. Has the American mortgage industry made similar progress?

Commentary

The conversation around student loan debt and its economic impact on Millennials, those born from 1980 to 1998, has some questioning whether the future of the American Dream is in jeopardy. The nation’s student loan debt has soared to $1.4 trillion, surpassing credit cards in becoming the largest source of personal debt outside a mortgage.